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By this point we’ve all heard about the cartoonish immorality of the GOP tax plan—raising taxes on the working poor while cutting taxes for the super-rich.

But setting aside these moral considerations, the Republican tax reform package is also a catastrophe as economic policy. As designed, it will super-charge trends that have stalled growth and wages in the United States for the last four decades. Neither the House nor the Senate plan will do anything to spur investment and both will bolster a tax code that incentivizes short-term speculation and the squeezing of workers, supply chains and consumers.

Our economy has plenty of problems, but too little cash at the top is not one of them. Tax cuts for corporations and the rich—along with a suite of policies pushed over 40 years—have shifted how, when and where corporations and individuals decide to invest, spend and save.

Today, corporations are not investing because shareholders pressure managers to deliver immediate returns and because industries are so consolidated that dominant firms don’t actually need to invest or innovate to remain competitive. Private investors are not putting their money into productive new enterprises, but rather are earning their returns from the sky-rocketing value of assets—stocks, financial products, real estate, art—that can be passed down to future generations.

What this means is that businesses have plenty of profits, but they’re not using those funds to do things that actually create jobs or grow the economy. Instead of funding new research to create better products, expanding operations to boost jobs or increasing wages, these businesses are instead choosing to give money to shareholders—a practice that benefits short-term investors but not the workers who make the company run. A massive tax cut to corporate profits will increase that pool of available money, while also increasing the returns to short-term investors now tempted by an even bigger potential payout.

When not rewarding shareholders directly, businesses have been busy buying up other firms. By providing companies more cash on hand, the GOP tax bill would likely mean even more mergers, which frequently result in cuts to jobs, the erection of barriers for small business and the curbing of consumer benefits. Activist investors will have greater incentive to push for such mergers as the super-rich see a chance to pass un-taxed estates on to the next generation.

The GOP tax plan will exacerbate these trends, increasing shareholder payouts at the expense of creating jobs. As a result, middle-class Americans will face both tax increases and a weaker safety net.

Under the Senate tax plan, almost everyone loses. On average, the bottom three-fifths of income earners would see a tax increase, according to analysis from the Institute on Taxation and Economic Policy. As a result of the individual mandate repeal, 13 million Americans could lose health insurance by 2027, according to the CBO. New methods for calculating the Earned Income Tax Credit will result in lower payouts to the working poor. The loss in government revenue forecloses the possibility of job-creating public investment in infrastructure, education and care work.

All of this is unfair, but it’s also bad economics. Too often, progressives cede economic arguments to the Right, but we should not hesitate to combat the tax plan over the issues of jobs and growth. By further consolidating wealth and power in the hands of the very few, the GOP tax plan is designed to double down on the same strategy that has failed working Americans for decades.

More by Nell Abernathy, The Roosevelt Institute

My opposition to the current tax-cut plan has nothing to do with envy of the rich. It has everything to do with trying to prevent the US from turning into a plutocracy. We are rapidly heading in that direction.

(I do not like the Democratic push for more immigration. We largely agree on that issue.)

What I am all in favor of is entrepreneurial capitalism. This is the small-business in the community type that provides most of the jobs. It is the type that apologists for capitalism-in-general always point to.

I am against the wild-west style of our speculative capitalism. This tax cut will put a huge amount of money on this side. Speculative capitalism is already stuffed to the gills with money. This is the kind of capitalism is a drag on the middle class and US economy. This is the kind of capitalism that does mergers and acquisitions to strip companies of their equity and leave them in high debt. It is this kind of capitalism that acquires a company, raids the pensions, lays off swaths of workers and ships jobs overseas. Do you like that?

The tax cut will make that problem worse. There are no guarantees that the corporate tax cut will create jobs in the US or that the repatriated profits will be used for anything other than stock buybacks and dividend payouts. CEOs have admitted that that is what they will do and that is what they did in the past. Corporations will use the tax windfall for whatever they want, and the CEOs will use it to enrich themselves.

Almost nothing will "trickle down" below the top 10%.

It always intrigues me that believers in markets would believe Paul Ryan's claim that these tax cuts will increase workers' wages. Wages are determined by the markets, not how much money a corporation has. He either does not understand markets or he is simply lying. I suspect the latter.

How can people keep falling for this stuff?

Posted by neoPhysiocrat on 2017-12-11 06:43:15

I agree 100% with those points outside the regurgitation of trickle down feelings... so about 25%. The rest is just garbage since it tries to take the moral high ground against the drivers of capitalism... Its typical loathing of the rich because its convenient for the topic... Bernie sanders tried it and his socialist views were rejected... HRC tried it up until her entire party was exposed for their hypocrisy... And obummer probided cover for. illegals as his own backyard burned to the ground So why again is a tax cut attacked immediately because theres in veneral a cut across the board? Gee, i just cant imagine why, with records like that.. If it helps the rich too, screw it, right?

Posted by Raptor1 on 2017-12-11 01:40:40

I had a bit of trouble following your post, but I will give an attempt at a reply.

(What is handingbiran anyway?)

Trickle-down is a long standing policy which Obama did fail to reverse but which is more intense under Republican administrations. GWB's tax cuts followed the standard trickle-down model being heavily tilted towards the rich. In the 5 years after his tax cuts growth was essentially flat. However it did provide a lot of money to the financial sector when then caused the famous financial crash of 2008.

The Payoff of billions (TARP) was passed under GWB. It was needed to help prevent a full grown depression caused by trickle down policies of Reagan, GHWB, Clinton, and GWB. (Yes I blame Clinton too).

There was nothing illegal about Obama's immigration policies. The Executive has discretion in how to deploy resources when enforcing the law.

I do not support every action of Obama. I am actually a harsh critic of him. His administration is a wasted opportunity to rein in the financial sector and so-called free trade.

Pres. Trump ran on reining in the financial sector and reversing our trade imbalance. To date he has been in favor of reversing regulations on the financial sector while giving them a huge tax cut, stocking his cabinet with Wall-Streeters, and giving tax preference to US companies that shift production offshore. Not good so far!

Posted by neoPhysiocrat on 2017-12-09 11:38:21

So you assumed wrong about me, then opened the box... So lets look a little deeper, i appreciate the invite.So obama was recovering under trickle-down, and you credit him for an economy that has SURGED under a real leader? How interesting, seeing as he is now riding the coattails and taking credit for it all, ehen his record is a disgrace.Lets give him the credit he deserves... And stop me on anything thats not right. Thanks obummer, for the improved race relations you took credit for (race wars going on right now)... Thank you, for demonstrating contempt for your own democracy handingbiran billions, concocting a payoff, and taking an apology tour to rub shoulders with the likes of castro ... Thanks obummer, for your illegal mandates on Immigration and health care, and removing work requirements for welfare (yeah, thats great for the economy and the people you seem to think youre concerned about)... Thanks obummer, for opening the white house to black pnather-led groups and muslim brotherhood. Thanks, obummer, for offering flexibility to russia on open mic, obliterating middle east, and then colluding to produce fake agendas, fake dossiers... And most of, being with HRC, which in and of itself is a disgrace to american people.That should cover it for now. Time to wake up, neo.

Posted by Raptor1 on 2017-12-09 10:42:56

I suppose it is safe to assume that you are a proponent of the infamous trickle-down economic theory. There are two things wrong with that theory:

1) We have been trying this since the Reagan Administration and the middle class has been on a downward path since. Sure there have been some upticks but these were driven by debt-fueled booms, not true wealth-building prosperity.

2) There is already a ton of money "at the top." If any trickling down was going to happen it would be happening already. Anyway, those at the top have learned how to stop the leaks through union-busting and globalization so nothing trickles down anymore.

As for the dead economy of the past eight years, since 2010 when we finally recovered from the last trickle-down failure (i.e. GWB) there have been unbroken month-after-month job growth. Wages have been largely flat, but the global labor market is responsible for that.

Posted by neoPhysiocrat on 2017-12-09 06:25:25

Wow... Where to begin with this unbelievable lack of common sense from so-called journalists.So the past 8 years of a dead economy, failed health care and border security policy, and complete weakness in the face of foreign powers, combined with collusion now seen stretching straight to the top, is actually LESS important than a tax break they've already stated loud and clear they wont support; like everything else that would be good for the country?

Well then, we should all just listen up to those that have shown their hands from day one, and yet behave as if they're holding some grand trute.

Simply hysterical... In a couple ways.

Posted by Raptor1 on 2017-11-23 23:00:08

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